New tools and technologies will enable fund managers to embrace the opportunities presented by the rapidly-evolving asset management sector, but choose wisely.
Technology is already a key battleground in the fund management sector, but as digital channels proliferate and become even more important, and new entrants from the FinTech world move into the industry, this challenge will only become more daunting. Choosing the right fund management software for both today and the future has never been more important.
There is no single solution that will suit all fund managers: the systems, tools and functionality required will depend on the nature of each individual business. Some may choose off-the-shelf packages, others will develop their own technologies, and collaborations will become more common, particularly with FinTechs that have a new approach to offer.
Still, asking certain key questions will help fund managers to make smart choices. Consider the following:
1. How will the software augment our data and analytics capabilities?
Financial services is the ultimate data business, yet fund managers have been slower to tap the possibilities of analytics than other sectors of the industry. Fund management software must support your business’s data ambitions, providing seamless example to a “single version of the truth” in order to help generate actionable insight.
2. Do we need a cloud solution or an on-premise package?
Outsourced and hosted fund management software will shift your business model from capital expenditure to operational expense, and may enable you to fill skills gaps. Software-as-a-service via cloud also often works out cheaper and will certainly be more scalable. On the other hand, you’re ceding an element of control and dependency to a third-party provider.
3. What will the software mean for our regulatory compliance?
Look for software with built-in support for the regulatory burdens faced by the business, including updates and upgrades as reforms change the picture. Your fund management software will certainly need to cope well with all mandatory regulation, but may also need to support other standards – the increasingly important Global Investment Performance Standards for example.
4. What functionality is available?
Fund managers’ businesses are increasingly complex, spanning multiple asset classes and geographies. Your fund management software must be able to cope with the complexity, while also offering key functionality such as portfolio accounting, pricing, fees processing, reconciliation and validation. In simple terms, does the software do everything you need it to do (both today and in the future)?
5. How will data security and privacy be ensured?
This is a key consideration for every element of fund management software, whether you opt for a cloud-based solution on an on-premises package. What are potential vendors’ track records in this area, how will your data be kept safe and what is the precise nature of the protections are in place?
6. What level of automation is available?
Manual interventions cost money and divert resources that could otherwise be deployed in value-adding areas. Look for fund management software incorporating end-to-end processes that include the facility to identify issues with data and correct them automatically without jeopardising the on-going workflows in unaffected areas.
7. What are the visuals like?
Data visualisation is the key to turning the information in the business into insight – both for fund managers and their clients. Look for software that presents data clearly and simply, so that it’s possible to grasp key issues very quickly, as well as offering further drill downs into the detail. Think about issues such as reporting and data extraction too.
8. What support will we get?
As fund management moves towards real-time reporting, problems, errors and systems failures have the potential to seriously compromise performance. You’ll need extensive support and training when first implementing a new software solution, so all in-house staff are confident using it to its full potential, but also ongoing support. Will your software provider be a partner rather than just a vendor?
9. Will we be future-proofed?
No fund manager is static. You need a fund management software solution that is capable of meeting the demands of your future business as well as today’s. Make decisions in the context of your current business strategy. Cloud-based solutions may work especially well for growing asset managers.
10. What about new audiences?
As asset managers begin to deal with more millennial (and even Generation Z) investors, they will need new digital capabilities, including greater transparency and immediacy. How will potential fund management software solutions rise to the challenge?
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